Purchase applications result in a small increase in mortgage applications

“Mortgage rates rose last week, with the 30-year fixed rate rising to 6.4%, the highest level since early October,” said Joel Kan, MBA vice president and deputy chief economist. “Despite these slightly higher rates, purchase applications increased during the week and remained at a stronger pace than a year ago, with increases in conventional and government purchase applications. The Government Purchasing Index, which includes FHA, VA and USDA applications, rose 9% and had its strongest week since 2023.

“Despite slowing home price growth and lower mortgage rates, affordability remains a challenge in many markets and government lending programs remain attractive to qualified buyers looking to purchase a home,” Kan added. “The average purchase loan size fell to the lowest level in two months. Rates have risen about 10 basis points over the past four weeks and as many borrowers sought to take advantage of rate cuts, refinancing applications fell nearly 6% last week for the slowest weekly pace since September.”

Although the refinancing index was down 6% from the previous week, it was up 117% from the same week a year ago. The refinance share of mortgage activity also fell, to 53.4% ​​of total applications, from 55.4% a week earlier.

The seasonally adjusted purchasing index rose by 8% compared to a week earlier. The unadjusted purchasing index rose 2% from the previous week and was 20% higher than the same week in 2024.

The share of the mortgage interest deduction (ARM) in activity increased to 7.9% of total applications.
The Federal Housing Administration The (FHA) share of total applications fell to 18.8%, compared to 19.9% ​​the week before.

Meanwhile, the The U.S. Department of Veterans Affairs (VA) share of applications increased from 15.2% to 15.4% and the US Department of Agriculture (USDA) shares also rose from 0.3% to 0.4% during the same period.

The average contract rate for 30-year fixed-rate mortgages with a conforming loan balance increased from 6.37% to 6.40% during the week. Rates for 30-year mortgages with large loan balances have increased from 6.39% to 6.49%.

The average rate for 30-year mortgages backed by the FHA rose from 6.14% to 6.15%, while the rate for 15-year fixed loans fell from 5.83% to 5.80%. Interest rates for 5/1 ARMs fell from 5.65% to 5.44%.